Written by
Ram Charan

04 May 2017

Ram Charan: Time to step up

04 May 2017 • by Ram Charan

The basis of competition and creation of value is people. Capital is more freely available than talent, and the providers of capital bet on people who they believe will create value. It’s not the other way round. In the digital age what matters is talent. This talent is in short supply today.

Just as the CFO is the trustee for capital, financial affairs and performance, HR is the trustee of leadership and functioning of the organisation. Does the organisation have the right people in the right jobs? Is it developing future leaders? Is the organisation high performing and flexible enough to adapt to external changes on a timely basis?

These are the highest value-added tasks and also enormous in scope and depth. HR needs to conduct them in partnership with colleagues in other functions. HR cannot let low-value tasks be a distraction. I am seeing that many of the transactions that HR carries out today will be automated through digitisation and some are already moving to the finance function.

This shift will rejuvenate HR. My last article, in the Harvard Business Review, came out as a recommendation to “split HR in two”, but it is this reassignment of tasks that I was referring to.

Partners in the digital end

In the digital age, the two functions that are most critical to a company’s survival are HR and digital IT. HR has the responsibility to find digital IT people and embed them in the organisation to drive transformation. Taking the administration of benefits and transactions – some of which are outsourced – out of HR allows us to move into those high value-added tasks.

There is no reason why an HR person with that kind of high-level involvement in the business can’t become a CEO. It is happening. One of many examples is Santrupt Misra, who is the senior-most HR person for the $50 billion Aditya Birla Group in India and also CEO of a $2 billion global division of that company.

HR in the Middle East

In the Middle East, HR is needed more than ever simply because there is a greater shortage of talent, and recruiting is the highest priority. Equally important is how the talent is deployed and retained. Many Middle Eastern corporations are family owned and now have great need for CEO and top management succession. HR is vital. Many of the finance-oriented transactions of HR, such as benefits and administration, can be outsourced to local or multinational firms. HR should then link its contributions to the needs of the business. Hiring one or more HR people with experience outside the function can help matters. This is an emerging trend that is likely to continue, because it helps HR to understand and add value to the business.

Hear Ram speak

Today, Ram is speaking at the HR Summit and Expo in Dubai, in a session entitled: “The road to talent mastery in the new economy”.